There has been a rise in the Small and Medium Enterprise (SME) gas and electricity prices, according to the latest SME Power and Gas markets reports, from Cornwall Insight.
This is the first time SME prices have risen since Q418 following five consecutive quarters of price reductions.
The below graph shows one-year acquisition prices for 25MWh SME gas contracts and 6MWh SME electricity contracts.
Sam Holland, an analyst at Cornwall Insight said: “Prices for SMEs fell steadily in 2019 after a milder winter led to oversupply in the gas markets. These reductions continued through the first half of 2020 due to COVID-19 associated falls in demand. However, in the three months to 3 November 2020, average SME gas prices increased by 5% for 25MWh contracts, while SME power prices for 6MWh contracts rose by 10%.
“Recently, the market has seen an upward trend in wholesale prices, contributing to the increase in SME prices. In fact, from 4 August to 3 November day-ahead gas prices rose by 159% to 37.75p/th, finding support from declining temperatures, alongside 20-month high LNG prices caused by adverse weather in Asia and North America. Across the same period, day-ahead power prices increased by 73% to £52.75/MWh as demand for power showed continuing signs of recovery.
“Despite the second national lockdown, SME prices remained steady during November with suppliers applying small price adjustments. Lower temperatures offset reduced gas demand and resulted in day-ahead gas prices averaging 37.74p/th, whilst day-ahead power prices fell to £46.29MW/h on average. They were buoyed by tight supply margins causing price spikes.
“Looking ahead, wholesale prices could recover further as news of a ~90% effective vaccine has led to growing oil prices. This has not yet affected gas and power prices for SMEs in GB but may do so in the coming weeks.”